Sunday, November 20, 2011


Is it a scam?

It is a season of unearthing scams.
Money, one can never have enough of. I need money, you need money, my domestic needs money, beggar at traffic signal needs money, neighbors driver needs money trader needs money, manufacturer needs money, poor need money—(LOANS TO US CANT TURN INTO NPAs). And above all and most important, the rich want (not need) money. Banks are always there to give money to the rich against a collateral gaurantee.

Is it a scam?
Technically, a loan starts to become NPA if it is not paid back from after 180 days or as per the terms laid down contractually.

As per RBI website, following are the NPAs as of 14th Nov.

1-Public Sector Banks----Rs 71047    Crores.
2-Nationalised Banks-----Rs 42907   Crores

Total 1+2……………… Rs  113954 Crores. Does this figure remind one of Telecom RAJA?

Then there are those loans which the borrowers being unable to pay up, apply for what is called--OTS—“One time settlement scheme” and “Compromise settlement”. In such cases, generally, banks waive accumulated interest amount, waive penalty and ease future installments of principle payments on concessional rate of interest to ensure recovery of principle amount. Such outstanding do not appear under the heads of NPA (how convenient)

Some banks try and off load part of their NPAs to "asset reconstruction companies" (ARCs) so as to show cleaner books. ....Such outstanding do not appear under the heads of NPA. (How convenient)

Ever heard of a collateral guarantee of an industrialist being invoked?

Ever heard of an Aircraft being taken over by bank?

Ever heard plant and machinery of a company being taken over by a bank?

Do similar rules apply to us, you, and me?

Will banks compromise on student loan of the needy and deserving students?

Will banks compromise on home loans of the needy?

Will banks compromise on Scooter loans of the needy?

Would a needy common man get similar benefits? Perhaps not, because we belong to a different category of India borrowers.
Govt refuses to continue subsidy on petrol, LPG, diesel and doesn't hesitate compromising financial stakes running into thousands of crores of Rs with the high and mighty.

During current fiscal year, industry has been given subsidies/concessions to the extent of app. Rs 6 Lakh crores.(yes,six lakh crores) and despite all this,the industrial growth has dropped to 1.91%.

Is it there a scam?

There goes a saying--It is the industry which falls sick, never the industrialist


posted 20/11/11
b k chowla


Sandhya said...

I lime that line 'the rich (not need) want money' - so true!

Nobody took Kingfisher planes for fuel due!

'Will banks compromise on student loan of the needy and deserving students?
Will banks compromise on home loans of the needy?
Will banks compromise on Scooter loans of the needy?'

You cannot even dream of them waiving these loans!

This is the best line: There goes a saying--It is the industry which falls sick, never the industrialist!

We are always fools!

Very well written articles, Chowlaji!

bchowla said...

Sandhya,appreciate your kind words.
Thank you

The Holy Lama said...

Never understood banking. Now this confuses abit more. Small term buisnessmen take loans because it is better form of finance.

Shilpa Garg said...

Very well said, as usual!
With each passing day... month, newer forms, types of scams come to light!! Sad state of affairs!!

Anonymous said...

I hope that there is no scam here.
May be its time for govt to start to tighten the norms which govern its NPAs.

Insignia said...

We borrow from bank at some high interest rate. They use part of that money to give us a small sum with low interest rate when we save with them. How nice.

For all the luxury and mindless spending, the industries and corporations get exempted but not common man. You raised a good topic Sir.

R. Ramesh said...

hi bkc r u? wishes

Alka Gurha said...

Lack of governance, and promotion of personal interests at its best...In 7 years UPA has created such a mess that India Shining has become India corrupt.

Jon said...

Sir, now when we say the nationalized banks, its surprising to see no pvt names in the NPA list. The reason bein govt. forcin national banks to invest in dead schemes...and pvt ones erasin their NPAs thanks to their accountants.

Scooter loan for needy wont happen so is educational loan.

one thing to highlight is large scale pilfering happenin in the name of agri gold loans.

and regardin the needy...national banks have to compete with pvt banks. in the market controlled world do u think they will invest in dead schemes?

Sujatha Sathya said...

this post offered a new and fresh perspective on NPAs
the industrialist v/s common man differentiation was so well brought out.
sad state of affairs